Tame inflation numbers boost stocks
NEW YORK – Investors bid stocks higher Wednesday after the Labor Department reported tame inflation figures for the second straight day, boosting Wall Street’s confidence that the Federal Reserve would keep interest rates steady.The consumer price index, which measures price increases at the retail level, rose 0.4 percent in July, slightly higher than June’s 0.2 percent increase. But with food and fuel prices removed, so-called “core” CPI rose just 0.2 percent, less than the 0.3 percent economists expected.Combined with Tuesday’s producer price index, which showed a decline in core wholesale prices, the data points to a drop in inflation pressures. That would allow the Fed to stop raising rates, which would otherwise threaten economic growth and cramp corporate profits.”The Fed could not have written these numbers any better to make their case on the economy,” said Jack Ablin, chief investment officer at Harris Private Bank. “This, I think, could really help the markets start to move forward.”In early afternoon trading, the Dow Jones industrial average rose 66.28, or 0.59 percent, to 11,296.54.Broader stock indicators also advanced. The Standard & Poor’s 500 index added 6.67, or 0.52 percent, to 1,292.25, and the Nasdaq composite index gained 19.93, or 0.94 percent, to 2,134.94.Bonds gained on the good inflation news, with the yield on the benchmark falling to 4.87 percent from 4.93 percent late Tuesday. The dollar lost ground against other major currencies, while gold prices rose.Crude oil futures slipped for the second straight session as tensions in the Middle East continued to cool. A barrel of light crude was quoted at $72.10, down 95 cents, on the New York Mercantile Exchange.The housing market showed more signs of slowing, which could also motivate the Fed to maintain its current position on rates. Housing starts fell to an annualized rate of 1.795 million in July, down from 1.85 million in June. The number of building permits issued likewise fell.In earnings news, cosmetics maker Estee Lauder Cos. Inc. saw its fiscal fourth-quarter profits slid 33 percent on one-time charges related to cost cutting and a tax settlement, but the company nonetheless beat Wall Street profit forecasts by a penny per share. Estee Lauder slid 79 cents to $36.39.Bulk discount retailer Big Lots Inc. added 56 cents to $18.33 after posting a second-quarter profit versus a year-ago loss and raising its forecasts for full-year profits. Analysts expected the company to post another loss.Clothing retailer Abercrombie & Fitch Co. saw its quarterly profits climb 14 percent on strong sales of its surfer-related clothes. Abercrombie jumped $6.68, or 12 percent, to $62.20 on the news.Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where volume came to 811.18 million shares, compared with 938.56 million traded at the same point Tuesday.The Russell 2000 index of smaller companies was up 6.52, or 0.93 percent, at 704.35.Overseas, Japan’s Nikkei stock average surged 1.61 percent. In afternoon trading, Britain’s FTSE 100 was down 0.02 percent, Germany’s DAX index gained 0.63 percent, and France’s CAC-40 rose 0.44 percent.—On the Net:New York Stock Exchange: http://www.nyse.comNasdaq Stock Market: http://www.nasdaq.com
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